Section 277 — Income Tax Act 2007: The 15% holding limit condition

The 15% holding limit condition 277 1 If the 15% holding limit condition was met when a holding in a company was acquired or last added to, the condition is treated as continuing to be met until an addition is next made to it. 2 “ Holding in a company ” means the shares or securities (whether of one class or more than one class) held in any one company.

3 An addition is made to a holding in a company whenever the company whose holding it is—

a acquires further shares or securities in the company, but b does not do so by being allotted shares or securities without becoming liable to give any consideration.

4 For the purposes of this section—

a holdings in companies which—

i are members of a group, whether or not including the company whose holdings they are (“company A”),

and ii are not excluded from the 15% holding limit condition, are to be treated as holdings in a single company, and b if company A is a member of a group, money owed to it by another member of the group is to be treated—

i as a security of the latter held by company A, and ii accordingly as, or as part of, the holding of company A in the company owing the money. For the purposes of this subsection “ group ” means a company and all companies which are its 51% subsidiaries.

5 Subsection (6) applies if, in connection with a scheme of reconstruction—

a a company issues shares or securities, b the shares or securities are issued to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, and c those persons do not become liable to give any consideration for the shares or securities. In this subsection “ scheme of reconstruction ” has the same meaning as in section 136 of TCGA 1992.

6 For the purposes of this section—

a a holding of the shares or securities in the second company, and b a corresponding holding of the shares or securities issued by the company, are to be regarded as the same holding.